"The Limits of Structural Change"

Jeffrey Oxman and Brian Smith

MIT Sloan Management Review

Fall 2003, pp. 77-82

This article contends that many of the initial rationales for giving primacy to organization structure no longer apply. Though the types of structures have changed (hierarchical, flat, matrix, etc.), some leaders are now recognizing the inherent limitations of structural change itself. Instead of attempting to spark change with organizational redesign, some companies are focusing on nonstructural issues such as people, processes, and rewards.

A very interesting chart in the article identifies initial rationales for formalizing organizational hierarchies, and then briefly discusses how the bases for those rationales have changed and what the implications for evolution are. Below are the initial rationales and evolutionary implications:

• Control and separation of duties—"Job requirements are likely to be increasingly embedded in processes and work-;flow systems and become even more dynamic;"
• Top-down resource allocation—"Processes will be driven by advocacy of need, not positional authority; 'allocation of fixed resources' planning will be replaced;"
• Ownership of knowledge—"Broader sharing of information will only accelerate this phenomenon;"
• Cascading of communications—"increasingly open information sharing will better enable people closest to each issue to make informed decisions;"
• Performance management—"Performance will likely become increasingly self—managed, with people choosing with whom they will work and skill replacing position as the criterion for assignments;
• Compensation management—less long-term loyalty means more prenegotiated contracts and fewer long-term plans;
• Career management—"People seek out roles that are comfortable or challenging, depending on personal needs;"
• Need for organizational order—"Velocity of change requires more flexible, project-based structures."

Case studies are provided showing how organizations are moving beyond structure at BP, Duke Power, and W.L. Gore and Associates.

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